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Report of the Board of Directors


Housing market remains under pressure

The forecast growth in number of households will remain a major long-term factor in the increasing demand for homes. Add to this the fact that new developments are still failing to keep pace with the increase in demand, the pressure on the residential market will only increase. As the forecast residential demand will be very much focused on the largest cities in the Randstad region and the Brabantstad conurbation, this pressure is becoming increasingly uneven across the Netherlands.

Specifically for the liberalised rental market, there is still a major lack of supply, especially in the mid-rental segment, and this is also increasing pressure on this segment of the market. However, affordability, in both the rental and the owner-occupier market is likely to become a major issue in the years ahead and Bouwinvest is therefore monitoring this situation very closely.

Yield compression continues

Investor demand for residential property remains very high and it is only the lack of suitable supply that is keeping investment volumes down. This large demand is putting further pressure on initial yields, especially in the largest cities, where we could well see further compression.

This makes it increasingly difficult for institutional investors to buy residential property in these cities, as it is becoming more and more difficult to meet their internal investment hurdles. Institutional investors have therefore increased their focus on new-build residential projects and this is likely to continue in the period ahead.

Sustainability goes mainstream

Newly developed homes will, almost without exception, be very sensitive towards sustainability and reduced energy use and carbon emissions. Using innovative technology, homes will increasingly generate their own energy and have near zero (or zero) GHG emissions. An increasing amount of existing stock is currently being adapted to these new demands, as future owner-occupiers and tenants are increasingly demanding energy-saving solutions.

The Fund is well positioned for the future

Bouwinvest has a clear vision of what makes an interesting asset for its residential portfolio. Thanks to our comprehensive network of contacts with vendors, real estate developers, real estate agents and, last but not least, local municipalities, we are offered a constant and substantial flow of investment opportunities. However, the market is changing.

The enthusiasm of developers to sell to investors, partly as a result of shortages, is declining. Comparable owner-occupier homes are generating higher returns, or developers are looking to maximise profits and are therefore choosing to sell to investors via tenders. Institutional parties in particular are focusing en masse on the same areas (i.e. the Randstad and Brabantstad urban conurbations) and products (mid-rental segment), because that mix offers the most favourable investment perspectives. We therefore expect the Fund to face continuing fierce competition for the foreseeable future.

On the other hand, we note that the Fund has a substantial pipeline of over € 690 million. The pipeline has been largely created in a fiercely competitive environment, as mentioned above. In addition to the purchase price, other criteria also play an important role, such as trust, expertise, efficient decision-making and our long term focus. This, combined with our perseverance and continuing focus on high-quality homes, sustainability and the mid-rental segment, we are confident that we will achieve our targets for the period 2018 to 2020.

Adding value through active asset management

In addition to our acquisitions, we will continue to optimise our standing portfolio through active asset management aimed at maintaining and increasing the value of that portfolio. Our focus will be on the environmental and social sustainability of the homes in our portfolio. We will also continue to devote a great deal of attention to developing and maintaining close relationships with our tenants and our property managers to maintain our high occupancy levels.

Amsterdam, 19 March 2018

Bouwinvest Real Estate Investment Management B.V.

Dick van Hal, Chairman of the Board of Directors and Statutory Director
Arno van Geet, Managing Director Finance & Risk
Allard van Spaandonk, Managing Director Dutch Investments
Stephen Tross, Managing Director International Investments

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